4000 - Advisory Opinions
Stockholder Rights Plans: Acceleration of Registration of Rights
November 28, 1989
Gerald J. Gervino, Senior Attorney
In your memorandum of November 7, 1989, you indicate that you have been asked to state this agency's policies and practices in response to a bank's request to accelerate the effectiveness of its registration statement ("Statement") under Section 12(g) of the Securities Exchange Act of 1934, 15 U.S.C. 78l(g)(1982) ("Exchange Act").
You propose that we ask the bank to provide us with an adequate opinion of counsel concerning the legality of the rights plan under state law. The opinion should also address the questions of whether (a) the board of directors has the legal authority to adopt and implement the rights plan, and (b) whether the actions taken by the board in considering and adopting the rights plan were in accordance with the director's fiduciary duties to the bank and its shareholders.
In support of this position you indicate that you had a conversation with a staff attorney at the SEC and have read an SEC no-action letter of January 7, 1989, addressed to ***. In that no-action letter, the SEC stated that it would not act on any request for acceleration of its Form 8-A registration statement for rights unless a legal opinion of the sort you have described were furnished by the bank.
We have no objection to your following SEC practice with respect to acceleration of registration statements for rights plans. We note also that the above no-action letter, as well as the subsequent no-action letter of June 17, 1987 (copy attached), deal also with registration requirements under the Securities Act of 1933, 15 U.S.C. 77a et seq. (1982) ("1933 Act"). Although banks are exempt from registration under the 1933 Act, it may be prudent to monitor these rights plans for disclosures in periodic reports under the Exchange Act.